You’ll recall the drawdown that began at the end of March this year. That coincided with major shifts in every currency pair in the portfolio. It was an unpleasant experience to say the least.

The lifetime return on QB Pro’s high risk setting

The shifting appears to be over with. We can get back to the strong trends that the strategy thrives on. QB Pro finished the month up 13.6%.

I project things to get better now that the markets are strongly trending. They’ve again picked a direction and really stuck to it.

The changes made last month paid off. The signal to noise ratio kept us out of some losing trades. The core QB Pro strategy, depicted in this graph from Myfxbook, shows that it’s clearly tracking well under the current market conditions.

The returns only including QB Pro

The QB Yen strategy posted a minor loss. The performance doesn’t discourage me at all. That said, the numbers are telling me that I overweighted the trending component this month. I’m going to put more of the portfolio weight back into QB Pro and take it away from QB Yen.

QB Yen posted a small loss to the portfolio

There are two things that I love about the trending strategy.

1. It’s a trending strategy. It gives us a chance to make money when we’d otherwise be sitting out of the market

2. It expects to make money over the long run

Things are looking great. I’m going to keep the maximum leverage in place at 35:1 on the expectation of similar future performance.

Big news

Now that things are back on track, I’m planning to open QB Pro to new traders in July. Why should you consider joining QB Pro?

Best way to learn is to have money on the line

You can see open trades in real time

Learn what it’s like to suffer knowing that your trading rules expect to contain a mathematical edge

You are willing to risk your money. You face the very real possibility of loss.

QB Pro is open to everyone except US residents and citizens.

If you’re not on my mailing list, make sure that you register so that you’ll receive updates when slots for QB Pro open.

April and May were a real swift kick in the teeth. There’s no hiding around the fact that the market wasn’t very nice to me or my trading accounts.

The vast majority of pairs in the portfolio blew out into major trends. That is bad news for a mean reversion strategy. When one currency trends, there are usually a handful bouncing around the mean. It gives us a chance to offset the losses. That didn’t happen recently, which is why my traders and I had a rough go of it.

I expect things to get better

Last month was bad enough that I completely ceased trading for two weeks. After turning the system back on in the second week of May, QB Pro continued to endure minor losses. That was thanks to one of the best trading decisions that I’ve made in the past year, which was to dramatically reduce the leverage.

The high risk account took a 6.2% loss. That would be very troublesome on a normal leverage account, but it’s a drop in the bucket by high risk standards. I look at it as more or less breaking even.

As a sign of my increased confidence, I increased my total deposits to $7,500 across the two accounts. As of today, the high risk account is back to trading on 20:1 leverage. It was at 5:1 for the past few weeks.

Changes to QB Pro

The signal to noise ratio contains enormous predictive power for my trades. I asked the question, “Does the signal to noise ratio at the time of entry predict the outcome of my QB Pro signals.

Judge for yourself.

The signal to noise ratio predicts the returns of QB Pro

The first two dots to the left represent 82.62% of all the QB Pro signals. That’s the reason that the strategy makes money.

I use 1/2π as the barrier between a range and trend. When the SNR < 1/2π, the profit factor is 1.5 (very profitable). When the SNR > 1/2π, the profit factor drops to an atrocious 0.62.

Conclusion: only take trades if the SNR is in the good area. That’s exactly what the updated strategy is doing as of last Friday.

Based in part on experience and largely based on statistical analysis, I found a way to bend QB Pro into a historically profitable trending system on yen crosses. I’m sort of rushing this out the door because the market conditions are favorable. The accounts are trading USDJPY, EURJPY and GBPJPY on 1/3 of the overall portfolio. Perhaps I’m tapped out on the creativity front, but I’m calling this sub-strategy QB Yen.

Here’s a screenshot of the equity curve for USDJPY in MetaTrader. This was part of my quality control analysis to ensure that the signals generated at the proper times.

I eventually want to analyze whether QB Yen can tolerate the spread costs of more exotic crosses like CADJPY. Until then, heavy weights will go on the most liquid yen crosses until it looks like they can handle the higher costs of the more exotic pairs.

QB Pro historically wins in 2 out of every 3 months. I don’t have enough data to judge whether consecutive losing months are dependent or independent, but it’s only happened twice historically where the system lost 3 months in a row. It’s never lost more than 3 consecutive months going all the way back to 2008.

Based on the new changes, the changing market conditions and the historical analysis of drawdowns, I feel much more comfortable putting more money into the account. For those of you that decided to take a break, I personally believe that the worst is over. The market will of course be the judge of that.